Every year, timeshares in Orange County (OC) incur about $175 million in property taxes. This is a big number that 2020 hasn’t been kind to. The barriers set by COVID-19 have drastically hindered tourism in Florida – especially in OC. Although local resorts own about $9 billion in taxable property and the industry itself has profited nearly $10 billion year over year since 2017, somebody is looking to lessen this tax obligation quickly. But will OC respond to a timeshare tax break like Maui County did?
According to the Orlando Sentinel, many people that have been involved in Florida tax breaks in the past are (said to be) clueless on the origin of a new proposed legislation for such. The OC Property Appraiser was first notified of the (potential) legislation’s language after it was leaked to the Property Appraisers in Sarasota and Osceola County. Their legal advisor, Robert Grimaldo, had this to say. “If passed, this will negatively impact tax assessments on timeshares.”
Altering the Way OC Appraises Timeshare Properties.
So what does he mean? In a nutshell, the article explains how lobbyists have been used in the past to help persuade the majority controlled Florida legislature to benefit timeshares. If you dig a little bit yourself, you’ll find that the proposed tax breaks involve some of the same concerns Osceola Country brought up in a lawsuit against Wyndham and won. In 2017, Marriott, with the help of ARDA and other Florida lobbyists, was able to successfully persuade lawmakers to rule in their favor with a similar approach.
Although this proposal appears to be moving quickly without much public information, questions still need to be raised. At the end of the day, why are multi-billion dollar timeshare companies being considered more than struggling vacation owners during this time. Like we’ve pointed out numerous times over the past few months, timeshare companies haven’t done much to help those that paid them for an unusable vacation.
Instead, some entity involved in the industry is focusing on the way appraisers determine the property value of timeshares so they can save money. No matter where the proposed tax break came from, the measure is looking to force OC appraisers to value timeshare properties based on resale prices. The problem is, as the past has continuously proven, there are not enough legitimate resale transactions to develop accurate valuations. Because of this, current law forces a property appraiser to look at new sales prices for the valuation.
Price of Re-sold Timeshares Vs. Newly Sold Contracts.
It’s important to keep in mind that a timeshare on the resale market is significantly cheaper than a new purchase, many being listed for $1. There’s a reason why timeshare organizations sell their product the way they do. Almost no one is actively looking to buy one these days. In other words, a proposition like this smells extremely fishy.
Calling for property appraisers to create valuations based on a few cheap resales (by people who just want to get rid of the liability) and not thousands of new, $20K+ sales is nonsensical. Nonetheless, many believe it to be justified. But is it because they believe it’s fair or are they benefiting themselves?
Costly Special Assessments Could Be Coming Soon.
If timeshares can lower their tax bills and force owners to pay a high mandatory special assessment, 2020 won’t be all that bad for them. Last year, we did an article about a new Florida legislation that increased the ceiling of assessment costs. This means, the companies operating out of this state are set up well to recoup their losses in 2021.
Rob Kelley, a Wyndham legal representative, shed some light on his pitch to lawmakers. “With timeshare assessments, the present scheme is like solid gold for the taxing authorities,” Kelley said. “Because they’re reaping a tremendous amount of tax paid by people who don’t live and vote here.” It appears he might be communicating that voters aren’t affected – so what’s the big deal?
It’ll be interesting to see what vacation owners get in the mail at the end of this year.